Understanding Definition of Deductions

This chapter discusses:

Click to jump to top of pageClick to jump to parent topicDeductions

Global Payroll for Malaysia comes with a number of deductions to demonstrate how Global Payroll rules can meet common processing requirements such as Employee Provident Fund (EPF) and Social Security Organization (SOCSO) contributions.

Click to jump to top of pageClick to jump to parent topicDelivered Deductions Elements

In the following table, the first column contains the deductions name and a description. The letters gc in a row indicate that the deduction has a generation control. The letters po denote a post-processing formula. The letters pr denote a preprocessing formula. The other four columns indicate the deduction calculation rule unit × rate, unit × rate × percent, or amount. The processing of some of these deduction codes is discussed in more detail later in this chapter.

The delivered deduction elements are:

Name and Description

Unit (or Base)

Rate

Percent

Amount

CNY DD PB

(Chinese New Year payback, gc, po.)

FAD AC ADV AMT

  

Variable – numeric FAD VR RECVRY PCT = 100%

  

DEDUCT IRB

(deduction to pay Inland Revenue Board)

      

Variable — Numeric

TER VR AMTPYIRB

DEEPAV DD PB

(Deepavali advance payback, gc, po.)

FAD AC ADV AMT

  

Variable – numeric FAD VR RECVRY PCT

=100%

  

EPF DD AN VO

(voluntary EPF contributions on ANN income)

      

Variable – numeric EPF VR ANN VOL

EPF DD ANN (EPF contributions on annual income)

     

Variable – numeric EPF VR ANN

EFP DD ARR

(arrears EPF deduction)

      

Variable — Numeric

EPF VR ARR AMT

EPF DD EE PY

(employee EPF contribution for previous year)

      

Variable — Numeric

EPF VR PY

EPF DD EE TO

(total employee contribution)

     

Variable Numeric

EPF VR TOT EE

EPF DD EE VO

(voluntary employee EPF contribution)

      

Variable Numeric

EPF VR EE VOL AMT

EFP DD EEREG

(regular EPF deduction)

      

Variable Numeric

EPF VR TEMP REG

EPF DD ER

(employer EPF deduction)

      

Variable Numeric

EPF VR ER GROSS

EPF DD ER VO

(voluntary employer EPF contribution)

      

Variable — Numeric

EPF VR ER VOL AMT

EPF DD ERANV

(EPF annual contributions employer vol )

      

Variable — Numeric

EPF VR ER AN VO

EPF DD POSTX

(Post-tax EPF deduction.)

      

Variable — Numeric

EPF VR POSTX

EPF DD PRETX

(pre-tax EPF deduction)

      

Variable — Numeric

EPF VR PRETX

EPF EEREG VO

(Regular Employee EPF Voluntary contributions)

     

Variable — Numeric

EPF VR VOL AMT TEM

FREEZE PYMTS

(freeze payments)

      

TER VR FREEZEAMT

HALF PAY LVE

(half pay leave deduction)

Payee level

LVE FM HALF RATE

    

HARI RAYA DD

(Hari Raya advance payback, gc, po.)

FAD AC ADV AMT

  

Variable Numeric

FAD VR RECVRY PCT

100%

  

LN DEDUCT 1

(company loan)

      

LN VR DED1

LN DEDUCT 2

(housing loan)

      

LN VR DED2

LN DEDUCT 3

(car loan)

      

LN VR DED3

LWOP

(leave without pay)

Variable — Numeric

LVE VR LWOPWKLDYS

Formula

LVE FM UNPLRATE

    

LWOP HRLY

(leave without pay hourly)

Variable

LVE VR LWOP HRS

Rate Code

KMHRLY

    

LWOP RTO

(LWOP retro)

      

Payee Level

LWOP RTO PY

(LWOP retro previous years)

     

Payee Level

SAL ACCR REC

(recovery of salary accrual)

      

GLI AC SALACCR

SHORT NOTICE

(deduction in lieu of notice)

      

TER VR NOTIFEE

SOCSO EE

(employee SOCSO contribution)

      

SOC VR CTREE

SOCSO EE RTO

(employee retroactive SOCSO contribution)

      

Payee level

SOCSO ER

(employer SOCSO contribution)

      

SOC VR CTRER

SOCSO ER RTO

(employer retroactive SOCSO contribution)

      

Payee level

TAX ADDL REG

(additional tax on regular)

      

TAX VR ADDL AMT

TAX ANN ADDL

(additional tax on annual)

      

TAX VR ANN ADD

TAX DD ANN

(annual tax deduction)

      

TAX VR ANN DED

TAX DD CP38

(tax on CP38)

      

TAX VR CP38 DED

TAX DD PREYR

(tax deduction for the previous year)

      

TAX VR PY DED

TAX DD STD

(scheduler tax)

      

TAX VR DEDUCTION

TAX DD TOTAL

(total tax)

      

TAX VR TOTAL

TAX DD ZAKAT

(tax deduction for ZAKAT )

      

TAX VR ZAKAT

UNFREEZE TAX

(unfrozen taxes)

      

TER VR TAXUNFREEZE

UNP ANN LVE

(unpaid annual leave)

ANN VR UNPWKLDYS

LVE FM PAYRATE

    

XMAS DD PB

(Christmas advance payback, gc, po.)

FAD AV ADV AMT

  

Variable — Numeric

FAD VR RECVRY PCT

100

  

Click to jump to top of pageClick to jump to parent topicDeduction Calculations

This section discusses:

Click to jump to top of pageClick to jump to parent topicEPF Deductions

Global Payroll for Malaysia comes with 12 deductions for EPF amounts.

See Setting Up Employee Provident Fund Contributions.

Click to jump to top of pageClick to jump to parent topicSOCSO Deductions

Global Payroll for Malaysia comes with four deductions for SOCSO deduction amounts.

See Setting Up Social Security Contributions.

Click to jump to top of pageClick to jump to parent topicTax Deductions

Global Payroll for Malaysia comes with eight deductions for tax deduction amounts.

See Setting Up Taxation.

Click to jump to top of pageClick to jump to parent topicLeave Without Pay Deductions

The leave without pay (LWOP) deduction is entered or generated as a result of an approved unpaid absence event occurring in the period.

This deduction uses a unit × rate calculation rule. The system calculates the units by counting the workable days of unpaid leave. The rate LVE FM UNPLRATE is derived from the payee's standard daily rate by dividing the monthly rate by the calendar days. You use this deduction to pay the absence take LWOP. This amount is then taken from the gross amount.

This deduction element contributes to the SOC AC INCOME SEG, ERN AC LEAVE, and EPF AC GROSS accumulators.

Click to jump to top of pageClick to jump to parent topicLoan and Advance Recovery

You use the LN DEDUCT deductions to recover the amount that is paid for loans. The deduction is taken when an amount exists in the loan balance accumulator. Each loan deduction element uses a variable (LN VR DED) to calculate the loan repayment according to the specifications that are established in the loan feature. No generation control or special proration rule exists.

When used, the loan deductions (LN DEDUCT 1 company loan, LN DEDUCT 2 housing loan, and LN DEDUCT 3 car loan) contribute to the NET PAY accumulator.

See Also

Setting Up Loans

Click to jump to top of pageClick to jump to parent topicFestive Advance Recovery Deductions

Global Payroll for Malaysia enables you to pay festive advances through the payroll system. However, because the payments are advances, they must be recovered through deductions in subsequent pay periods. Separate customary deductions corresponding to each of the festive advance types and their supporting elements enable you to deduct the festive advance amount in subsequent payments. This enables you to recover the entire outstanding festive advance payments when an employee is terminated.

You specify the deduction elements that are to be used for the recovery of the festive advances on the Festive Advance Pay Program page in Human Resources.

Deduction elements all use a calculation rule of base × percent, where the base is derived from accumulator FAD AC ADV AMT and the percentage can be entered.

The following festive advance deductions enable you to recover festive advance payments by subtracting from the FAD AC ADV AMT accumulator:

See Also

Posting Festive Advances to Global Payroll

Click to jump to top of pageClick to jump to parent topicMaximum Deduction Limits

The system issues a warning message when a payee's total deductions exceed a defined percentage of wages within a processing period. This check is not done for terminated employees. To perform this calculation, the system uses accumulators MYS WAGES and MYS DEDUCTION to total the month's wages and deductions, variable CMN VR MAXPCTDED to hold the maximum deduction percentage, and formula CMN FM DEDLIMIT to test whether the limit is exceeded and to issue a warning. Variable CMN VR MAXPCTDED maintains a limit of 50 percent. This increases to 75 percent when the housing loan deduction (LN DEDUCT 2) is present.